LABOUR warned yesterday that Scotland faces a stark choice – between hefty tax rises or the scrapping of universal benefits.

Scottish party leader Johann Lamont said the country’s grim financial future means freebies like NHS prescriptions, tuition fees and personal care of the elderly may have to be axed.

In her first major policy speech, she accused First Minister Alex Salmond of “bribing” voters with popular policies while continuing with an “unfunded” and damaging council tax freeze.

Lamont said: “Scotland cannot be the only something-for-nothing country in the world.”

The Glasgow Pollok MSP announced a commission would be set up to decide what benefits can realistically be offered to the public in the years ahead.

A group of the party’s MSPs and MPs will work with academics and other experts to develop “fully costed” policy options.

She said: “What I will say will not always please the people of Scotland, but it will always be honest and true. I won’t promise what I cannot deliver and I will never hide the cost of what I propose.”

The surprise move was immediately seized on by Deputy First Minister Nicola Sturgeon, who branded the new policy group a “commission for cuts”.

But Labour sources said they were confident Scots are ready for an “honest debate” about public finances.

Lamont admitted the Nats’ free universal benefits had proved popular with voters but said they were unfair and damaging to the economy.

She urged those who supported the measures to consider their impact on other parts of the economy.

Lamont said: “I know there are families who are working hard on average or above-average incomes who feel they pay enough and are attracted by policies like free prescriptions, free tuition fees and the council tax freeze.

“I know where they are coming from but I ask them to look at how they are paying for those free things.”

However, Sturgeon accused Lamont of kicking difficult policy decisions into the “long grass”.

She said: “Tory cuts to spending are happening now and it is by taking the difficult decisions that this SNP Government have been able to protect support for households.

“At a time when people are facing serious wage restraint and rising living costs, the council tax freeze, the abolition of charges for prescriptions, support for higher education, apprenticeships and the elderly are all part of the support we in society give to each other.”